There Are Now More First-Time Buyer Programs Than Ever. Here's How to Take Advantage.
Ask most first-time buyers what their biggest obstacle is, and the answer is almost always the same: the down payment. Not the monthly mortgage payment. Not qualifying for a loan. The lump sum of cash needed upfront is what stops people in their tracks.
What most people do not realize is that there is more help available right now than at any point in history.
2,624 Programs and Counting
According to the latest data, there are now 2,624 homebuyer assistance programs across the country, offering an average of $18,000 in benefits per borrower. These programs come in the form of grants that never need to be repaid, forgivable loans that disappear after a set number of years, and low-interest second mortgages designed to cover down payments and closing costs.
That is not a small number, and it is not a niche benefit reserved for a narrow slice of buyers. These programs serve a wide range of income levels and are available in virtually every state.
Federal Programs You Should Know About
The big three federal loan programs remain the foundation for most first-time buyers.
FHA loans allow down payments as low as 3.5% and have more flexible credit requirements than conventional loans. They are one of the most popular options for buyers who do not have a large savings cushion.
VA loans, available to eligible veterans, active-duty service members, and surviving spouses, require zero down payment and carry no monthly mortgage insurance. If you qualify, this is one of the best deals in lending.
USDA loans offer zero-down financing for homes in eligible rural and suburban areas. Many buyers are surprised to learn that their desired neighborhood qualifies.
Beyond these, Fannie Mae's HomeReady and Freddie Mac's Home Possible programs allow down payments as low as 3% for borrowers who meet income guidelines.
State and Local Programs Add Even More
On top of federal options, most states run their own assistance programs. California's Dream For All program, for example, offers up to 20% of the purchase price for down payment or closing costs, capped at $150,000. It is structured as a shared appreciation loan, meaning you repay the assistance plus a proportional share of your home's appreciation when you sell, refinance, or transfer the property, so it is important to understand the long-term obligation before applying. Many other states offer grants ranging from $5,000 to $20,000 for qualifying buyers.
Several major banks have also stepped up. Chase offers a Homebuyer Grant of $2,500 to $5,000 in eligible areas. TD Bank's Home Access Mortgage provides up to $10,000 in lender credits. The National Homebuyers Fund offers grants and forgivable loans up to 5% of the loan amount, available nationwide.
Why Most Buyers Miss Out
The biggest problem with these programs is not that they do not exist. It is that most buyers never hear about them. A recent survey found that the majority of first-time buyers are unaware of down payment assistance options in their area. Many assume they do not qualify, or they simply do not know where to look.
This is where working with a knowledgeable mortgage professional makes a real difference. The right loan officer will know which programs are available in your area, which ones you qualify for, and how to stack multiple benefits together to minimize your out-of-pocket costs.
Think you need to save for years before you can buy? You might be closer than you think. Let's review the programs available to you and find out how much help you can get.